Elder Law Guide: What Types of Assets Are Subject to Probate?

Our parents guide us through life from the time we’re little to when we have little ones of our own. We all return the favor eventually and help them navigate their final years with love and dignity.

They’ve worked hard to create a wonderful life. We don’t want to see it all disappear after they pass. That’s where legal matters like estate planning and probate come into play.

Did you know that 60% of Americans have no estate planning documents? Even more are left wondering, “What is probate and what types of assets are subject to probate?”

Learn everything you need to know about probate and what assets require probate in this quick guide. 

What Is Probate?

Probate refers to the legal process of what happens to our belongings after we pass. It involves the authentication of a will and testament created by the person who passed, known as the decedent.

The court authorizes and follows the will if the decedent made one. If not, the estate follows the state-specific laws regarding:

  • Identifying the decedent’s personal property
  • Inventorying the personal property
  • Appraising the personal property
  • Paying off taxes and debts left by the decedent
  • Distributing the decedent’s remaining property

The decedent names an executor of their last will and testament before they pass. If they do not, then a judge will appoint someone to become the executor.

The executor files the appropriate paperwork in your local probate court and proves the validity of the will.

What Types of Assets Are Subject to Probate?

Assets subject to probate sometimes vary from state to state, but the following always go through it.

1. Individual/Personal Assets

Individual or personal assets include any property solely under the decedent’s name. The property must not have co-owners, beneficiary designations, or a payable-on-death designation. Personal assets commonly include:

  • Investment accounts
  • Bank accounts
  • Stocks and bonds
  • Boats
  • Vehicles
  • Airplanes
  • Real estate
  • Business interests

Individual assets do not need a high value to be probate-subject property. Low-value items like memorabilia, electronics, and artwork count as well.

2. Beneficiary Assets Without Designation or with Already Deceased Beneficiaries

The decedent’s assets with named beneficiaries or payable-on-death designations do not go through probate unless the beneficiary dies before the decedent. Common examples of assets in this category include:

  • Retirement accounts like 401(k)s and IRAs
  • Annuities
  • Life insurance policies
  • Medical savings accounts
  • Health savings accounts
  • Life estates in property

If every named beneficiary passes before the decedent, the asset passes directly into the decedent’s probate estate. This applies to assets with no named beneficiaries as well.

3. Tenant-In-Common Assets

Any property titled in the decedent’s name along with at least one other individual falls under the tenant-in-common category. Often unmarried property owners have assets titled this way. Other examples include:

  • Investment accounts
  • Bank accounts
  • Stocks and bonds
  • Vehicles

Tenant-in-common assets differ from joint tenants and any other arrangements including rights of survivorship. In those cases, the asset passes directly to the survivor if one owner dies without needing to go through probate.

You can prevent tenant-in-common assets from entering probate if you change the name on the property from your name to your living trust. Then the asset will automatically pass on to your designated beneficiary.

4. Property Outside a Trust

Sometimes people create a living trust while still alive and move their probate-subject property into it. Any property safely stored in this trust will not require probate.

However, any property subject to probate left out of the trust will need to go through it. This happens when you forget to move property into the trust before passing.

You can create a pour-over will to automatically move any property not currently included in the trust after your passing. But this does not prevent the assets from going through estate probate before entering the trust.

What Types of Assets Are Not Subject to Probate?

Although many assets must pass through probate, many more do not require it. The following assets do not require probate:

  • Any property held in an established living trust
  • Life insurance proceeds (unless it’s a rare case and the decedent names the estate as their beneficiary)
  • 401(k)s, IRAs, and retirement accounts with a named beneficiary
  • S. savings bonds (co-owned)
  • Payable-on-death bank account or POD funds
  • Transfer-on-death securities (TOD)
  • Boats and vehicles registered with transfer-on-death allowed (varies by state)
  • Other vehicles that automatically transfer to immediate family members (varies by state)
  • Real estate with a valid deed stating transfer-on-death (varies by state)
  • Pension plan payments
  • Community property with the right of survivorship (varies by state)
  • Household goods and other select items that automatically go to immediate family members (varies by state)

In rare cases, one of the assets in the decedent’s name may actually belong to another person.

An example of this would be when the decedent put the asset in their name to secure it for a relative who did not have the ability. The relative must prove their rightful ownership, but then the asset passes directly to them rather than going through probate.

Is Probate Always Necessary?

No, probate does not apply to every estate.

Estates where the decedent owns no qualifying assets do not require probate. One example is when the decedent shared ownership of all assets with a surviving beneficiary. The assets then pass directly to the person(s) sharing ownership.

Probate does not apply if the decedent held their property in a trust, either. Very small estates whose totals do not exceed a certain value usually go through a simplified process compared to large estates. The cumulative value varies state by state.

In Oklahoma, the cumulative value of a property must not exceed $50,000.

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Now you know what types of assets are subject to probate and those that are not.

Remember that each state has a unique cumulative value limit regarding what qualifies an estate as big or small. You need to research your state’s current rules to know if you need to deal with probate after losing your loved one.

Oklahoma residents looking for more helpful information or news from their state need to check out the News 9 online blog. It’s full of interesting stories and articles about Oklahoma City and the world beyond.

So head on over today!